Pay Options for Nonexempt Staff

Districts often ask which payment options can be used for nonexempt staff earnings.

Frequently asked pay questions include:

• Is it best to pay nonexempt employees only during the months they work or spread payments over a 12-month period?
• Must a district pay nonexempt employees twice a month (bimonthly) or can they pay once per month?
• What implications are there for the different payment options?
• Can employees have a choice in payment options?

Nonexempt employees include bus drivers, child nutrition workers, custodians, maintenance workers, groundskeepers, crossing guards, clerical staff, instructional aides, and other employees who are paid by the hour.

Annualized Pay

Annualizing pay is the method of paying an employee a pre-set amount of gross pay per month in equal monthly installments regardless of the number of months worked during the school year. Most districts annualize pay for salaried (exempt) staff as noted in board policy DEC (LOCAL). The decision to annualize pay for nonexempt staff is based on the district’s pay practices.

A district can pay certain groups of nonexempt employees on an annualized schedule (e.g., campus clerical staff and instructional aides) while paying other employee groups (e.g., child nutrition workers and bus drivers) on a schedule based on the months worked—typically 10 months.

An advantage of using annualized salary payment is it provides an opportunity for employees to receive the same paycheck amount each month, even during the summer months when they are not working. This can support retention of staff and encourage them to return to work for the district in the next school year. It also spreads out insurance premiums, taxes, and Teacher Retirement System (TRS) deductions over a 12-month period instead of a 10-month period. Additionally, annualized pay can be a more efficient process for the payroll department.

However, consideration should be given to the amount of the paycheck. For some jobs, it may be best to provide paychecks only during the months worked to provide a paycheck that is sufficient to cover an individual’s living expenses. This is particularly true for employees who start work late in the year but whose pay must be spread over the summer months, leading to very small paychecks for the first year of service.

Bimonthly or Monthly

The Texas Payday Law, which requires Texas employers to pay nonexempt employees twice per month, does not apply to school districts but does apply to most charter schools. This allows school districts to choose whether to pay nonexempt employees bimonthly (twice per month) or monthly (once per month).

As noted above, paying only one time per month may be difficult for employees to budget expenses, although it may be more efficient for the payroll department.

Employee Choice

Allowing nonexempt employees to choose annualized pay and/or bimonthly versus monthly pay is permissible However, it can be difficult for the payroll office to manage different pay cycles. Most districts simplify pay procedures by designating pay practices by job categories of employees.

Occasionally re-evaluating your district’s pay practices is a good idea. Practices that benefit employees can increase employee morale and retention, and, in this difficult hiring time, could make a difference in the retention of current key employees.